Gaffe costs city of Port Orange $800K

Monday

Oct 8, 2012 at 1:54 PM

Residential customers in Port Orange and Daytona Beach Shores weren't charged enough for an energy surcharge for almost four years.

RAY WEISSSTAFF WRITER

PORT ORANGE — City Manager Ken Parker says a finance department billing mistake for wholesale water-and-sewer service to Daytona Beach Shores since 2009 has cost his city about $800,000 in revenue. He said residential customers in neither city were affected by a major miscalculation that involved an energy surcharge for almost four years. The bottom line was "they weren't charged enough," Parker said. "The rate tables are very complex. Our staff was reviewing the tables and found some anomalies," he said. "A few multi-family customers in Port Orange also were affected. We're correcting them." Parker said Port Orange probably would not attempt to recoup the $800,000 in lost revenue from Daytona Beach Shores. Over the years, he said the two cities hadn't budgeted either for receiving or paying that money. "It hurt us with revenue," Parker said. "They (the Shores) now will be billed the right amount." Parker said a city investigation is under way to better determine why the $800,000 gaffe occurred, and an auditor has been called in to also review the matter. He said the finance department was responsible for the rate tables and billing, adding that there's no initial evidence of "maliciousness" or illegality. "The wrong data was entered. I think it was just a plain human error, something that should have been verified and reviewed," Parker said. "Until we get all the facts, it appears this way." Stephen Whitner, finance director for Daytona Beach Shores, said city officials recently were notified by Parker of the 43-month-long mistake with the energy surcharge. "It had no effect on us one way or the other," Whitner said on rates or revenue in Daytona Beach Shores. "We've been told by Mr. Parker they are not going to ask for the money." In a detailed four-page email sent late Friday, Parker said the error in the "sewer calculation" was first discovered in some Port Orange multi-family and commercial monthly bills, because of faulty meters. That led to the even bigger mistake with the city of Daytona Beach Shores, a wholesale customer of Port Orange's. "The Shores rate table failed to charge for the energy for gallons used and recorded by the master meter," Parker said. "... "Because of the number of hotel units that were closed, as well as the depressed real estate market in the Shores, it was not readily apparent in the revenue that an error was made in the table." Parker said new procedures have been implemented that deal with how the finance department will oversee the billing. For now, he's unsure if or what punitive action will be taken. But ultimately Parker said he was responsible for the error. "The charter places responsibility of administration with the city manager. That means that I am responsible for the good as well as the bad," Parker said. "When failures occur, it is the city manager's responsibility to oversee the correction and hold those accountable for failures. At the same time, I realize that I am responsible to the City Council and you should hold me responsible for the failures as well as the correction." The City Council has called a special meeting for 6 p.m. Thursday to discuss how and why the under-billing occurred. City Councilman Don Burnette said the investigation must be completed to fully determine what happened and who was responsible. "I don't want to sound overly harsh or overly critical, as right now we are in the questioning stage. However, it must be said that I am glad to see that you are handling this with the utmost seriousness this deserves," he said in a Sunday email to Parker. "There were complete systemic failures involved, and we need answers for that. I accept and appreciate that you are accountable as being ultimately responsible. I also believe your actions so far are appropriate. However, I am sure you agree there certainly will need to be accountability down the line with individuals who have daily responsibilities in these areas of public trust."